One man's journey to financial independence.

Options Update – March 2018

With the markets recent volatility, some readers have asked that I share an update on my options activity. I continue selling puts against companies I want to own more of and using proceeds to purchase more shares of these companies.

Below are all my trades since July of last year:

Date

Action

Ticker

Expiration

Strike

Call/Put

Qty

Price

Net

close Price

closeout

Days to Exp

7/6/2017

Sell

MO

1/18/2019

90

Put

1

$19.00

$1,894.55

28.5

-$955.45

315

7/6/2017

Sell

MO

9/21/2018

75

Call

1

$5.15

$509.55

8/11/2017

BTC

MO

9/21/2018

75

Call

1

-$2.12

-$217.45

$292.10

7/6/2017

Sell

BDX

1/19/2018

210

Put

1

$18.00

$1,794.55

12/1/2017

BTC

BDX

1/19/2018

210

Put

1

-$1.38

-$143.45

$1,651.10

7/6/2017

Sell

MDT

6/15/2018

97.5

Put

1

$11.25

$1,119.55

11.25

-$5.45

98

7/6/2017

Sell

JNJ

6/15/2018

150

Put

1

$19.50

$1,944.55

20.66

-$121.45

98

7/20/2017

Sell

V

6/15/2018

115

Put

1

$17.50

$1,744.55

2/20/2018

BTC

V

6/15/2018

115

Put

1

-$2.89

-$294.45

$1,450.10

7/20/2017

Sell

V

1/18/2019

130

Put

1

$31.75

$3,169.55

13.45

$1,824.55

315

8/10/2017

Sell

ESV

1/18/2019

15

Put

2

$10.50

$2,094.55

3/3/2017

Assigned

ESV

4.55

-$4.55

8/9/2017

Sell

Teva

1/18/2019

37.5

Put

1

$19.30

$1,924.55

1/18/2018

BTC

Teva

1/18/2019

37.5

Put

1

-$17.00

-$1,705.45

$219.10

8/9/2017

Sell

Teva

1/18/2019

30

Put

1

$12.20

$1,214.55

3/6/2018

BTC

Teva

1/18/2019

30

Put

1

-$11.00

-$1,105.45

$109.10

8/10/2017

Bought

Teva

9/1/2017

17

Call

2

-$1.28

-$261.45

-$261.45

8/10/2017

Bought

Teva

9/15/2017

17.5

Call

5

-$1.37

-$690.45

9/12/2017

STC

Teva

9/15/2017

17.5

Call

5

$2.29

$1,139.55

2.29

$449.10

8/8/2017

Sell

GIS

1/18/2019

67.5

Put

1

$12.30

$1,224.55

11.2

$104.55

315

10/19/2017

Sell

GIS

1/18/2019

67.5

Put

1

$16.90

$1,684.55

11.2

$564.55

315

8/2/2017

Sell

MO

9/21/2018

80

Put

1

$17.50

$1,744.55

12

$544.55

196

9/7/2017

Sell

MO

1/18/2019

90

Put

1

$28.50

$2,844.55

28.5

-$5.45

315

10/17/2017

Sell

V

12/20/2019

160

Put

1

$52.52

$5,246.55

44

$846.55

651

10/25/2017

Sell

T

9/21/2018

40

Put

2

$7.30

$1,454.55

4.65

$524.55

196

10/26/2017

Sell

BBL

6/15/2018

35

Put

1

$2.55

$249.55

2/28/2018

BTC

BBL

6/15/2018

35

Put

1

-$0.66

-$71.45

$178.10

10/30/2017

Sell

CVS

1/19/2018

80

Put

1

$11.90

$1,184.55

1/8/2018

BTC

CVS

1/19/2018

80

Put

1

-$2.40

-$245.45

$939.10

12/11/2017

Sell

CVS

1/18/2019

77.5

Put

1

$10.42

$1,036.55

11.75

-$138.45

315

1/8/2018

Sell

CVS

5/18/2018

82.5

Put

1

$7.30

$724.55

13.33

-$608.45

70

10/31/2017

Sell

OHI

6/15/2018

29

Put

1

$2.50

$244.55

12/18/2017

BTC

OHI

6/15/2018

29

Put

1

-$2.45

-$250.45

-$5.90

11/13/2017

Sell

HBI

1/18/2019

20

Put

1

$3.00

$294.55

2.6

$34.55

315

11/14/2017

Sell

WMT

3/16/2018

100

Put

1

$10.85

$1,079.55

02/20/18

BTC

WMT

3/16/2018

100

Put

1

-$5.97

-$602.45

$477.10

12/01/17

Sell

BDX

3/16/2018

230

Put

1

$10.93

$1,087.55

01/30/18

BTC

BDX

3/16/2018

230

Put

1

-$3.00

-$305.45

$782.10

12/01/17

Sell

Teva

1/18/2019

32.5

Put

3

$17.20

$5,154.55

3/6/18

BTC

Teva

1/18/2019

32.5

Put

3

-$12.33

-$3,704.45

$1,450.10

12/11/17

Sell

RDSB

7/20/2018

60

Call

1

$6.34

$628.55

12

-$571.45

133

12/15/17

Sell

PG

9/21/2018

92.5

Put

1

$5.20

$514.55

14.05

-$890.45

196

12/15/17

Sell

GE

9/21/2018

18

Put

3

$1.64

$486.55

3.6

-$593.45

196

12/15/17

Sell

CHD

7/20/2018

50

Call

1

$2.78

$272.55

2/14/18

BTC

CHD

7/20/2018

50

Call

1

-$2.45

-$250.45

$22.10

12/28/17

Sell

SO

8/17/2018

48

Put

1

$2.75

$269.55

5.15

-$245.45

161

12/28/17

Sell

SO

1/18/2019

50

Put

1

$4.75

$469.55

7.7

-$300.45

315

01/08/18

Sell

WSM

8/17/2018

57.5

Put

1

$7.70

$764.55

7.2

$44.55

161

01/18/18

Sell

BGS

8/17/2018

30

Put

1

$2.50

$244.55

5.6

-$315.45

161

1/18/18

Sell

BGS

8/17/2018

35

Call

1

$1.82

$176.55

2/14

BTC

BGS

8/17/2018

35

Call

1

-$1.60

-$165.45

$11.10

1/19

Sell

IBM

9/21/2018

170

Put

1

$15.65

$1,559.55

17.75

-$215.45

196

1/23/18

Sell

OHI

1/18/2019

30

Call

5

$0.70

$344.55

0.7

-$5.45

315

01/23/18

Sell

T

1/18/2019

40

Call

2

$1.50

$294.55

02/28/18

BTC

T

1/18/2019

40

Call

2

-$1.33

-$271.45

$23.10

02/01/18

Sell

OMI

9/21/2018

17.5

Put

5

$2.20

$1,094.55

2.55

-$180.45

196

02/13/18

Sell

IBM

9/21/2018

150

Put

1

$10.26

$1,020.55

7.45

$275.55

196

02/14/18

Sell

OHI

1/18/2019

25

Put

4

$2.75

$1,094.55

2

$294.55

315

02/16/18

Sell

MO

1/18/2019

85

Put

1

$20.66

$2,060.55

20.66

-$5.45

315

02/20/18

Sell

SLB

9/21/2018

72.5

Put

1

$9.09

$903.55

9.2

-$16.45

196

02/20/18

Sell

CVS

8/17/2018

80

Put

1

$10.57

$1,051.55

13.38

-$286.45

161

03/05/18

Sell

HSY

8/17/2018

105

Put

1

$8.42

$836.55

8.42

-$5.45

161

03/05/18

Sell

ESV

1/18/2019

10

Put

2

$5.40

$1,074.55

5.6

-$45.45

315

03/06/18

Sell

V

1/17/2020

165

Put

1

$43.00

$4,294.55

43

-$5.45

679

03/07/18

Sell

XOM

6/21/2019

80

Put

1

$10.96

$1,090.55

10.96

-$5.45

469

03/08/18

Sell

MO

1/18/2019

75

Put

1

$12.73

$1,267.55

12.84

-$16.45

315

TOTALS

$55,334.75

$7,300.65

Booked

$7,781.50

The last update on trades had generated $46,022 in revenues. I’m approved for “naked” options trading meaning I can sell puts on companies I don’t own and without having the cash to purchase said security. My collateral is owning shares of companies as equity to cover. This update shows I’ve now generated $55,334 in revenues. Most of this money has already been used to purchase more dividend paying stocks. The closeout column is what my total profit will look like if I closed out all trades today. I’ve already closed out quite a few positions, you can see the trades. I’m actually down to $7,300 from $12,000 in the last update with the market corrections. The difference in the revenues and profits is what it would cost me to close out all the trades, about $48,000.

I’ve already booked profits of $7,781.50 on closed trades. Since my booked profits are nearly equal to Total profits, my open trades are neutral right now.

Note: These profits won’t include dividends which I do receive from investing in other dividend paying stocks with the revenue.

Since last update, I’ve made at least 15 trades, you can see the dates on all my trades above.

One of my top trades was closing out a $115 Visa put I sold. I (BTC) bought to close that put and made a net profit of over $1400. Yes, $1400 on 1 single put! I also closed out some TEVA puts for similar gains. My biggest gain to date was a BDX put I closed out for a sweet $1650 net profit!

My V puts continue to be rock solid. I sold an additional V put and quite a few new puts in HSY, MO, IBM, XOM etc. In fact, I used some of these profits to buy an additional 40 shares of V in this account recently.

So what happens in the case that one of these companies is lower near expiration (in the money)? Well, I have a few options.

a. I can do nothing and I’ll be required to purchase 100 shares of said security at the strike price. It’s sort of like I’m buying the company right now at a discount.

b. I can decide to purchase back the put for more money at a loss of approximately (strike – current share value) x 100.

c. Third option is to “roll” the put forward. What this means is that I simultaneously purchase the put back and sell another longer dated put so that I haven’t lost any money.

Any profits will go directly into purchasing more shares of solid dividend-paying companies.

This is just another avenue I’m using to earn additional profits so that I can get this dividend snowball moving faster. I actually just broke the $12,000 forward dividends goal ahead of schedule. I’ll probably be posting about that soon. The extra options income is certainly helping speed up the process. My forward dividends are currently $12,286, up from $11,197 a month ago. My goal by the end of the year is to be at a forward dividend income of $13,000. I’ll need to put to work about $23,800 at a 3% yield which shouldn’t be a tough task.

Best long ideas currently are SQ, V, BRK.B, MO, CVS, DIS to name a few. I’ll be adding more to these companies throughout the year at these prices. Yes I know that SQ and BRK.B don’t pay a dividend, but I’ve decided to have a speculative portfolio that contains non dividend paying stocks up to 10% of the portfolio value for now.

Comments

Exceptional performance, JC. More than $55k from options income is amazing, well done! I’m cranking the options machine this year and I’m hoping to increase my ability to buy more dividind growth stocks as you are doing.

I think you mixed me up with JC but not worries. Yes, the $55,000 has all been put back to work buying more dividend growth stocks which pay me more dividends that I can keep reinvesting back into more shares. Rinse and repeat. I’m looking for any ways I can get to speed up this process. So far I’m happy with my options trades.

Thanks for the update. It’s good seeing how others approach options. I typically go with shorter dated, like 1 month out options, but as a core part of the portfolio it probably isn’t a bad idea to go much further out in time if the premium is worth it. And then just use the premium to purchase shares and worst case scenario you just roll it out 6 months to a 1 year of course those expirations will be less liquid but it seems like a reasonable way to build the portfolio/dividends up.JC recently posted…Budget Check & Cash Flow Update – February 2018

I’ve played with shorter dated options but the commissions eat into the profits a lot. I sold an ITM V put with $4300 in revenues, at that price the commissions are negligible. You do make a good point about liquidity, however as time passes the puts before more liquid as more people are trading them closer to expiration. That’s the time I normally will roll them forward.

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Disclaimer

I am not a licensed financial professional. I created this site to be informative and entertaining. No purchases I make are recommendations to buy those particular equities. I'm not liable by any party for losses you might incur. All investments are subject to losing money and you should consult a financial professional before making any investment decisions.